The US$4 Trillion Monopoly

Stock markets are forward-looking. When they value a company, it is the sum of all its future earnings being considered. Even by that measure, Nvidia touching $4 trillion in market capitalisation, the first company in the history of the world to do so, is extraordinary. Consider the peers it has beaten. Till just a few months ago, Apple used to be at the top, a dominance it exerted for years. It is now at $3.1 trillion. This is even though Apple made $97 billion in net annual profits, while Nvidia was over $20 billion behind it. Google owns much of the online advertising market and makes even more profits than Apple. And yet it is valued at $2.1 trillion. Only Microsoft is anywhere close to Nvidia at $3.7 trillion.

What makes Nvidia special comes down to two words: Artificial In•telligence (AI). It makes graphics processing units (GPUs), the chips that lie at the heart of this technological up•heaval, which is about to change the world. There is no dearth of players in this field, but they all must turn to Nvidia to run the servers for crunching the phe•nomenal amounts of data that finally come to you as a human-sounding answer to a question. Or in the making of a video, just by giving an order in the form of a text prompt.

These GPUs were first designed for video games, but then Nvidia’s founder, Jensen Huang, was prescient enough decades ago to see what lay in the future and pivoted his company. Their GPUs are so valuable that they are bargain•ing chips in geopolitics, with the US government deciding which countries should have how many and of what calibre. And there is no competition anywhere in sight now for Nvidia. The market ranks it as the most lucrative monopoly that ever existed. This is not guaranteed because in technol•ogy disruptions can come out of nowhere. Companies, like Osborne with its personal computers, that were the flavour at the beginning of a new era vanished. But so far, Nvidia has shown itself to be 10 steps ahead of the competition.

About The Author

Madhavankutty Pillai

Madhavankutty Pillai has no specialisations whatsoever. He is among the last of the generalists. And also Open chief of bureau, Mumbai  

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